Challenge of the Increased Population of Smokers despite the Health Risks that Come with Smoking - Assignment Example

Student Name: Tutor: Title: Short-answer Format Course: SECTION ONE Main issue presented The main issue presented in the article is the challenge of increased population of smokers despite the health risks that comes with smoking. The government is grappling with the means of controlling or dealing with the problem of smokers and how to reduce it. There is an option of increasing tax or educating people to be more conscious about their health and lead a healthy lifestyle. Traders and smokers will both suffer in the case of increase in taxes. The traders will experience cuts in profits while smokers will suffer from withdrawal symptoms if they are not helped adequately to cope with the situation. Key stakeholders impacted by the outlined issue The first key stakeholders impacted by the article are the smokers themselves. Apart from being affected economically by losing money they spend on buying cigarettes, they are at a risk of being exposed to numerous health risks that are associated with smoking like lung cancer, throat cancer, among others. They can be attacked by diseases which may lead to a shorter life span. The addiction to smoking makes them to sacrifice important priorities like eating well to go and buy cigarettes. The second stakeholders are the traders. Both retailers and wholesaler reap profits from selling cigarettes to smokers. If tax is increased and the price of cigarettes go up, the profit margin realized will automatically go down hence impacting negatively on business. The manufacturers of cigarettes are also important stakeholders. The reason why they are still in business is because people buy cigarettes manufactured; there is a ready market. If the prices of cigarettes go up due to taxation, many people will not afford to buy cigarettes hence the market will shrink leading to low profit margins. Manufacturers will be negatively affected. Other stakeholders are the farmers who grow tobacco that is used to manufacture cigarettes. If there will be no ready market for cigarettes, the amount of tobacco being bought from the farmers will reduce and hence they will be negatively affected. The government also is another important stakeholder in the issue being discussed. It is the government that will introduce the tax that will lead to increase in cigarettes prices. The government is concerned about the welfare of the society in terms of health, education, and economic conditions and that is why it has to intervene in the issue of increased smoking. Charity workers are also not happy and they anticipate that an increase in the price of cigarettes will adversely affect the smokers who need some time to rehabilitate. They advocate for educating the smokers particularly in the poor masses. Economic theories drawn from the report Theory of optimal taxation The theory of optimal taxation holds that a system of tax should arrived at if it maximizes social welfare function being subjected to a set of constraints. A social planner is treated as a utilitarian. In this regard, the social welfare function is founded on the utilities of individuals in a given society (Stefania & Sleet, 2006). In the issue under discussion in the article, the government has a right to impose tax on cigarettes for the social welfare of its people. When people get ill because of smoking related illnesses, it is the government that will be called upon to allocate a huge budget on health issue to fight the illnesses. The government takes the initiative of introducing taxes so as to avoid spending more on treated smoking related illness. A system of tax has to maximize the social welfare of the people in the given society. The social planner, who is the government in this case, assumes that everyone in the society possesses same preferences with regard to leisure and consumption. Many people will want to see a healthy nation that is not affected by smoking related illnesses. Other Issues relevant in the article The article also exposes the issue of hoarding in an anticipation of a price increase. It is reported that retailers will buy the product before the price increase and wait to sell it later. Such incidents of rise in prices of products can lead to emerging of black markets that will benefits unscrupulous traders. It is only the rich who will afford the affluent life of smoking when prices of cigarettes go up. While the government insists on taxation, charity workers would like smokers to be educated on the effects of smoking on their healthy. SECTION TWO Main issue presented This article discusses the important issue of the increasing gap between the poor and the reach. The effects of bad economic times and companies rendering workers redundant without prior warning throw many into a dilemma (Leigh, 2013). Key stakeholders impacted by the outlined issue The first stakeholders are company owners who are faced with the reality of cutting down cost through reducing workers or job operation units. The Australian Bureau of statistics provides the relevant data about employment. The survey on the increasing gap between the rich and the poor was performed among employees; those with huge salaries and those with meager salaries. While the increase in salary for poorly paid employees was small, the increase in the highest paid employees was huge and substantial (Leigh, 2013). Employees are stakeholders in this report since their welfare and the increasing gap between the rich and the poor is being discussed. The government is another stakeholder because is responsible in protecting its citizens against exploitation by unscrupulous employers who want to exploit them. It is the role of the government to try and close the gap between the rich and the poor through the introduction of the progressive tax on their income. This will help in providing social goods like lighting, roads and security to the entire society or subsidizing basic needs. Economic theories drawn from the report Benefit theory This theory holds that tax levels are determined automatically since taxpayers pay in relation to the benefits that they receive from the government. Individuals who enjoy the most benefits from public services pay the most taxes. This article looks at the crucial issue of increasing gap between the rich and the poor. Individuals who receive the highest salaries have to be taxed more since they enjoy more from the public services than the poor individual. In order to close the gap between the poor and the rich, the wealthiest people have to be taxed more from their public services that they enjoy in order to provide for affordable services to the rest of the population. Bowel’s model has operational importance because it demonstrates that when social goods are realized under conditions of surging costs, the opportunity cost attributed to the private good is foregone. For instance, if there is a single social good and two taxpayers (A and B), their respective demand for the social goods will be denoted by ‘a’ and ‘b’; hence, a+b is the total amount demanded for social goods. The supply curve is indicated by a+b; demonstrating that goods are availed under conditions of increasing cost. Social goods’ production cost is equivalent to the private goods foregone; hence a+b also represent private goods’ demand curve. The intersection of demand and cost curves at B indicates how national income has to be distributed between private and social goods. This means that it is the role of the government to ensure there is wealth distribution among its population and the gap between the rich and the poor is reduced. This is the main concern raised in the article discussed (Borys & Piskorski, 2006) Distribution of resources is the responsibility of the government. Other Issues relevant in the article The reach people have invested in luxury homes and general real estate leaving the poor with nothing at all. People who are rich grow superrich to the extent of owning aircrafts when other people find it hard to meet their everyday needs. The rich spend lavishly in properties that increase their comfort while the poor continue to suffer. References Leigh, A., 12th July, 2013, Mind the gap: as incomes grow, so does inequality, The Drum, Black, Inc., retrieved from: http://www.abc.net.au/unleashed/4816394.html, on 12th July, 2013. Stefania A., & Sleet, C., 2006, Dynamic Optimal Taxation with Private Information, Review of Economic Studies 73: 1-30. Borys, G. & Piskorski T., 2006, Risky Human Capital and Deferred Capital Income Taxation, Working Paper. Article, follow the link in the reference Read More